European Union's MiCA Legislation and its Impact on Stablecoin Adoption: Lawyers Raise Concerns

European Union's MiCA Legislation and its Impact on Stablecoin Adoption: Lawyers Raise Concerns

Jul 10, 2023

By Hassan Shittu | @hassan-shittu

The European Union's Markets in Crypto-Assets (MiCA) legislation, enacted on May 31, has generated praise and concerns within the crypto industry.

While hailed as a groundbreaking regulatory framework for cryptocurrencies, there is growing apprehension regarding one particular aspect: the imposition of a daily transaction cap on private stablecoins.

Set at 200 million euros ($219 million), this limit has sparked discussions and calls for revising the MiCA legislation to prevent the potential stifling of stablecoin usage.

In an interview with Cointelegraph, legal director Chander Agnihotri and partner Rachel Cropper-Mawer from the global law firm Clyde and Co express their views on stablecoins.

They emphasized that using large stablecoins could face potential obstacles and suggested that regulators reconsider the daily limits associated with these digital assets.

Rethinking Stablecoin Oversight in the Face of Recent Incidents

Stablecoins were introduced to mitigate the price volatility in cryptocurrencies like Bitcoin, BTC, and Ether.

They aim to mirror the value of fiat currencies, particularly the United States dollar.

However, recent incidents, such as the collapse of TerraUSD (UST), an algorithmic stablecoin, in May 2022, and the temporary de-pegging of USDC following the collapse of Silicon Valley Bank in early 2023, have brought the regulatory spotlight onto private stablecoins.